CMHC: Alberta leads housing starts amid declines in major cities

Article content

Alberta has been a bright spot in Canada’s housing market as construction activity surged in Calgary and Edmonton in the first half of 2024 while other major cities faced a slowdown.

The Alberta boom, driven by a combination of factors including better home affordability and a strong economy, contributed to a four per cent rise in total housing starts across Canada’s six largest census metropolitan areas (CMAs) in the first half of the year, according to Canada Mortgage and Housing Corporation’s (CMHC) latest Housing Supply Report (HSR).

Article content

A total of 68,639 units were started in the six CMAs during that time.

Drawing on data from the CMHC’s Starts and Completions Survey, the report indicates that, despite the growth seen in Alberta, overall construction levels — when adjusted for population size — remained closer to historical averages, raising concerns about whether supply can keep up with the growing demand in other major cities.

The two Albertan cities and Montréal reported increases in total housing starts, with growth rates ranging from 40 to 70 per cent.

By contrast, housing starts dropped in Toronto, Vancouver, and Ottawa by 10 to 20 per cent, even though these markets have historically been drivers of national construction activity. The data points to higher interest rates and a rising cost of living as factors that may have slowed down new construction in these regions.

Meanwhile, apartment construction has emerged as a dominant trend in the first half of 2024.

“Nearly half of the apartments started in the first half of 2024 were purpose-built rentals — the highest share on record,” CMHC said.

Article content

Article content

According to the report, the shift in developers’ focus toward rental properties is likely due to changing demographics and declining homeownership affordability across the country.

The condominium market, however, is experiencing challenges.

“Except for Calgary and Edmonton, condominium apartment starts fell in the first six months of 2024 — a trend we expect will continue as developers struggle to reach the minimum pre-construction sales needed to start construction,” the report said.

Developers are facing difficulties in launching new projects, as higher interest rates have caused both investors and end-users to reduce their purchases of new condominiums. This decline has slowed down condominium construction, particularly in larger markets that are traditionally more active.

Despite these shifts, developers have continued to advance the completion of projects that are already in progress.

“Apartment completions increased across the six CMAs, setting new records in each one except Montréal and Vancouver,” the report said. CMHC noted that developers are prioritizing clearing backlogs and moving forward with projects that were previously under construction.

Article content

According to the report, various levels of government are also taking action to address housing shortages, however, whether these measures will effectively address the housing demand remains uncertain.

“Municipalities and provinces are working actively to increase housing supply and variety, with policies aimed at better meeting the needs of a broad range of buyers and renters,” the report said.

• Email: shcampbell@postmedia.com

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content